Market Roundup
• US Markit Nov Final Comp PMI 54.9 vs 4.9 previous; Svcs PMI 54.6, v 54.9 previous.
• US ISM N-Mfg PMI 57.2 V 55.4 forecast, 54.8 v, N-Mfg Bus Act 61.7 v 58 forecast ,57.7 previous.
• Fed’s Dudley: US government stimulus would likely spur more Fed hikes, will adjust views on rate hikes as considerable fiscal uncertainty abates.
• Fed’s Bullard: Economy needs only 1 rate hike to reach neutral rate because unemployment & inflation close to target.
• BoE’s Carney: US Pres-Elect Trump has reached wrong conclusions on trade.
• ECB’s Nowotny: Italian state taking stakes in banks cannot be ruled out.
• Renzi to resign as referendum rout tips Italy into turmoil, 'No' vote on Sunday wins by 19 percentage pts.
• Wall Street rises with oil; investors shrug off Italian referendum, Italian assets under pressure.
• UK govt begins legal fight against ruling that could derail Brexit, Britain’s top court says legal, not political issue.
• Finance ministers reject euro zone fiscal stimulus target.
Looking Ahead - Economic Data (GMT)
• 00:00 Japan Overtime Pay Oct -1.30%- previous
• 00:30 Australia Current Account Deficit* Q3 forecast 13.70b, 15.54b - previous
• 00:30 Australia Net Exports Contribution* Q3 forecast 0%, -0.20%- previous
Looking Ahead - Events, Other Releases (GMT)
• 03:30 Australia RBA Cash Rate* Dec forecast 1.5%, 1.50%-previous
Currency Summaries
EUR/USD is likely to find support at 1.0700 levels and currently trading at 1.0761 levels. The pair has made session high at 1.0794 and hit lows at 1.0754 levels. Euro rose against the dollar on Monday after Italian Prime Minister Matteo Renzi's loss in a referendum over constitutional reform, a defeat that traders had widely expected. Renzi is set to resign on Monday after the decision. The size of the "No" vote, at 59.1 percent, was more emphatic than had been forecast. Renzi's resignation could open the door to an early election next year and the possibility of the anti-euro 5-Star Movement gaining power, though many investors and analysts see it as more likely that a caretaker government will be put in place until an election in 2018. Expectations that the European Central Bank (ECB) will hint at reducing its bond purchase program when it meets this Thursday is also seen as adding to strength to the single currency. The euro gained 0.96 percent to $1.0763, after earlier rising to $1.0796, the highest since Nov. 15. It briefly weakened to $1.0503, the weakest since March 2015, in the immediate aftermath of the Italian vote.
GBP/USD is supported in the range of 1.2696 levels and currently trading at 1.2725 levels. It reached session high at 1.2742 and dropped to session low at 1.2696 levels. Sterling rose against the dollar on Monday investors shrugged off Italian Prime Minister Matteo Renzi's resignation, following voters' rejection of his constitutional reforms. The Italian referendum stoked worries about Italy's political stability and its banking system but financial markets recovered from an initial fright with Pound, euro rebounding, and bond yields rising as investors concluded fallout from Renzi's resignation could be contained. The pound briefly hit its strongest since early October against the dollar in early London trade, extending one of the currency market's best runs over the past month. But it fell 0.7 percent against a broadly stronger single currency to trade at 84.37 pence per euro, having earlier hit an almost five-month high. A suggestion by Brexit minister David Davis that the government may be willing to pay into the EU budget in return for access to the bloc's single market also helped it towards levels around $1.30 that it held in August and September.
USD/CAD is supported at 1.3230 levels and is trading at 1.3267 levels. It has made session high at 1.3295 and lows at 1.3235 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as oil rose and domestic attention shifted to an interest rate decision by the Bank of Canada. The loonie advanced 1.8 percent last week, its biggest gain in eight months, helped by stronger-than-expected domestic data and an agreement by members of the Organization of the Petroleum Exporting Countries to cut output. Oil, one of Canada's major exports, extended its gains since the production cut deal was struck. U.S. crude prices were up 0.87 percent at $52.13 a barrel. The U.S. dollar weakened against a basket of major currencies as bets that a snap election in Italy would not be triggered supported the euro. The Bank of Canada is widely expected to hold interest rates at 0.50 percent on Wednesday, but investors will look to the policy statement for any mention of what impact the U.S. election of Donald Trump could have on the Canadian and U.S. economies. The Canadian dollar was last trading at C$1.3268 to the greenback, or 75.34 U.S. cents, slightly stronger than Friday's close of C$1.3283, or 75.28 U.S. cents.
USD/JPY is supported around 113.00 levels and currently trading at 113.86 levels. It peaked to hit session high at 114.78 and made session lows at 113.06 levels. The U.S. dollar weakened against the yen on Monday as the greenback weakened as investors viewed recent dollar strength as overdone. A solid but unexceptional U.S. jobs report for November on Friday failed to add additional fuel to the dollar rally sparked by Donald Trump's surprise presidential election victory on Nov. 8.U.S. non-farm payrolls increased by 178,000 jobs last month after rising by 142,000 in October, the Labor Department said on Friday. However, wages slipped for the first time in nearly a year. The dollar index, which measures the greenback against a basket of six major currencies, slipped 0.67 percent to 100.09, after earlier dropping to 99.849, the lowest since Nov. 15.Meanwhile, New York Federal Reserve President William Dudley, one of the Fed's most influential policymakers, said it is too soon after the Nov. 8 U.S. election of Donald Trump to judge whether the Fed's plan for gradual interest rate hikes needs adjusting. The Fed is widely expected to raise U.S. interest rates at its Dec. 13-14 meeting.
Equities Recap
European shares edged higher on Monday as markets took some encouragement from a sound defeat in Austria's presidential election of a far-right candidate by a pro-European despite forecasts of a tight race.
UK's benchmark FTSE 100 closed up 0.4 percent, the pan-European FTSEurofirst 300 ended the day up by 0.67 percent, Germany's Dax ended up 1.8 percent, France’s CAC finished the day up by 1 percent.
Wall Street rose on Monday, with the Dow Jones industrials setting a fresh intraday record high, as further gains in oil prices fueled the energy sector and data showed strength in the domestic economy.
Dow Jones closed up by 0.24 percent, S&P 500 ended up by 0.58 percent, Nasdaq finished the day up by 1.00 percent.
Treasuries Recap
Longer-dated U.S. Treasury yields fell in choppy trading on Monday as investors viewed the dramatic bond market sell-off following Donald Trump's surprise U.S. presidential win as overdone.
The benchmark 10-year Treasury note yield was down 0.5 basis point at 2.385 percent, while the 30-year bond yield fell 1 basis point to 3.051 percent.
The two-year yield rose more than 1 point at 1.124 percent.
Commodities Recap
U.S. crude futures strengthened Monday before retreating in post-settlement trade as the market lost confidence OPEC cuts would be sufficient to reduce oversupply given increased U.S. drilling.
U.S. West Texas Intermediate crude rose early in the day and began to pare gains in the late afternoon, settling at $51.79 a barrel, up 11 cents or 0.21 percent, before retreating to as low as $51.11 a barrel.
Brent crude settled at $54.94 a barrel, up 48 cents - or 0.88 percent - before retreating to $54.22 a barrel.
Gold fell to its lowest price in 10 months on Monday as global equities strengthened and investors shrugged off worries about political instability in Italy, while U.S. Treasury yields rose after U.S. economic data.
Spot gold fell by as much as 1.6 percent to its lowest since early February at $1,157 an ounce, down more than $30 from the session high. It was down 0.5 percent at $1,171.11 by 2:39 p.m. EST (1939 GMT). U.S. gold futures settled down 0.1 percent at $1,176.50 per ounce.
